High Franc poor for Swiss Business

   “They finally have some business again,” my father-in-law notes as we drive past a gas station just over the border in Germany. For years Germans have crossed the border to purchase their gas in Switzerland, where it was cheaper. With the high Swiss franc, they’re staying in Germany now.

Swiss retailers would prefer this customer was parked in their lots. Instead this Swiss is shopping at a German retailer, taking advantage of the low Euro.

Swiss retailers would prefer this customer was parked in their lots. Instead this Swiss is shopping at a German retailer, taking advantage of the low Euro.

     The problems in many European countries and the stock market have driven investors back to the franc. For several years the franc was on par with our Canadian dollar. Now we pay about $1.25 for a franc.

     Coming back to Switzerland on Canadian money, that wasn’t good news. My reaction was, “Well, I guess I’ll do more shopping in Germany than in Switzerland.” Living within a few kilometres of the border makes that easy, especially with a good sized town nearby. Regrettably for Switzerland, I’m not the only one thinking that way.

     Mr. Loosli, CEO of Coop Switzerland (one of the biggest retailer chains in Switzerland) says that Swiss retailers will lose three billion francs worth of business this year to the EU countries around them. Last year it was 1.9 billion. That hurts.

     The Schleitheim folks have been crossing the border into Stuehlingen (about three kilometres) for a long time, and vice versa. The Germans came to buy gas and pasta, the Swiss went to buy meat, go to the dentist and optometrist. Now the traffic is mostly one way.

     Swiss retailers and businesses are doing all they can to get customers into their buildings. The automobile dealers have Euro exchange deals, and the big Swiss retailers Coop and Migros reduced pricing on a large amount of items.

     The whole thing reminds me very much of the scenario a few years ago in Canada/USA when the Canadian dollar rose to par with the USA dollar. Canadians were going to the USA to buy trucks and toys because they were so much cheaper. Eventually Canadian dealers had to lower prices to compete.

     The ones hurting the most of course, are the businesses who produce in Switzerland and export to other countries. As Canadian farmers who export most of their product, we know all about that. Swiss farmers sell most of their products within the country, so don’t feel the effects as much. But that opens a whole other can of worms – a limited market has its own issues.

     But I just remembered – I’ve got to go to Stuehlingen this afternoon for some groceries…

 

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